Vodafone Group Plc has agreed to buy 72.7% of Greek broadband company Hellas Online SA (HOL) for 72.7 million euros and plans to make an offer for the rest of the company.
Vodafone already owned 18.5% of the Athens-based company, giving it a 91.2% holding, Vodafone said in a statement today.
The company is expanding its broadband offers across Europe as Chief Executive Officer Vittorio Colao bets on the popularity of bundled mobile and fixed services. The deal builds up Vodafone’s struggling southern Europe business, where service revenue dropped 26% in the last fiscal year.
Vodafone bought the shares from Intracom Group and World Equities Investments Holdings SA. The deal gives HOL an equity value of 311 million euros, including debt, Vodafone said. Regulators still have to approve the deal.
Vodafone has gone after similar companies in Germany and Spain and has committed to spending 19 billion pounds improving its network in the next two years. Vodafone agreed to buy Grupo Corporativo Ono SA in March for 7.5 billion euros, including debt, and Kabel Deutschland Holding AG last year for 10.5 billion euros. HOL is a broadband and fixed-line telephony provider in Greece with around 519,000 customers as of December 31, 2013, representing a market share of approximately 11%.
Vodafone stated that it expects to achieve cost and capex synergies with an annual run-rate of 24 million euros before integration costs by the third full year post completion, equivalent to a net present value of approximately 135 million euros after integration costs. These synergies are expected to be realized from sharing network and IT infrastructure, savings on marketing and bill collections, and rationalization of overlapping functions.
Vodafone Greece currently owns a 18.4% stake in HOL. The transaction is expected to complete in the fourth quarter of 2014, following which, Vodafone Greece would own 91.2% of HOL and be under an obligation to extend a mandatory takeover offer for the remaining shares.
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